How Life Insurance Riders Enhance Your Coverage
Choosing a life insurance policy that’s right for your family is a difficult enough task, but will the policy you choose provide sufficient protection?
What happens if you become ill, have an accident and can no longer afford to pay the life insurance premium?
The good news is that for just a few dollars more per month, you can also buy a life insurance rider that will cover these types of situations and others which are described below.
Life Insurance Rider Explained
A life insurance rider is simply an extra form of coverage provided by life insurers that you can buy and will cover you for specific situations. Generally, you pay an extra premium in addition to the premium that you are paying for your policy. You can buy one or more riders to ensure you have all the coverage you need.
This allows you to create a life insurance coverage that is tailor fitted to guarantee that your family will always be protected no matter what happens.
Are life insurance riders expensive?
Generally, the answer would be no because most riders will only cost you a few more dollars per month depending on the rider and the amount of coverage.
Do life insurance riders vary from company to company?
The answer is yes and this is something important to keep in mind when you are considering not just your life insurance policy, but also any riders that you want to purchase. So, it’s important to consider your needs by always asking your agent about the different types of requirements, limitations and other provisions provided by different companies.
Some companies can add one or more of these riders directly into your policy, while other companies will only provide coverage separately.
Do I have to buy a rider immediately when I buy my policy?
Usually you do have to buy it when you purchase the policy, but there may be some exceptions. If you’re unsure whether you want the additional coverage right away, you may not have to buy the rider immediately and can add on the coverage later on. But, as this may also vary from company, this is another good question to ask your agent when buying life insurance.
The costs, coverage, expiration dates, and the extent and type of coverage can also vary so make sure you get the rider that matches your requirements.
Types Of Life Insurance Riders
Although there are many types of life insurance riders, we have selected the 9 most important life insurance riders which should cover most of the areas that might be of concern to you.
• Critical Illness Rider
Should you incur a critical illness while your policy is in force, the life insurer will provide you with a lump sum payment which is either specified, or an amount you select (depending on the company).
The one catch is that for most of these riders, the coverage is only for specified illnesses such as a heart attack, cancer, stroke and other forms of diseases described in the rider, and may vary from insurer to insurer. You can use this lump sum payment in any manner you choose.
• Waiver of Premium Rider
If you are worried about being able to keep up with your life insurance premium should you become totally disabled and unable to work, this rider allows you to keep your life insurance policy in-force without having to pay for it. The one thing to keep in mind is that most companies have an expiration date for these riders such as age 60 or age 65.
• Term Conversion Rider
A term conversion rider allows you to convert a term insurance policy into a “permanent life insurance” such as universal life, indexed universal life and whole life. The bonus for doing so is that you can do this without having to undergo a medical exam.
Term policies are purchased for periods of time such as 20, 25 or 30 years. When the policy expires and you wish to continue coverage, you will have to buy a new term policy to keep your coverage in force.
But, if your health deteriorates, you may find that renewing your term can be extremely expensive or you may even be denied coverage. Most term policies come with a conversion rider that will allow you to keep your coverage in-force without any medical exam or health underwriting. This is especially useful when health issues come up that would make it difficult or impossible to qualify for new coverage.
However, keep in mind that these conversions must occur before the date or age specified in the policy. The premium will increase quite a bit as well.
• Disability Income Rider
This rider is provided by most insurers but comes in a variety of different formats and variable provisions.
The rider will ensure that you will receive a “regular income” if you happen to become “totally disabled” and are unable to work. Keep in mind that some insurers will pay out a disability income if you are disabled because of an accident only, while others will cover you for both accidents and illness.
Another thing to keep in mind is that some insurers will pay this income at a specified amount, and/or may only pay you for a specific period of time, or will pay you only for the period of disability itself.
• Return of Premium Rider
This is another one of those riders which may be sold separately or written directly into your policy. Most people don’t realize that the majority of people who buy a term policy live to see the end of the policy they initially purchased.
Wouldn’t it be nice to get that premium money paid back as a refund?
Well, that’s exactly what this rider can do for you. Should you survive the term policy you purchased you will get your “life insurance premiums refunded” back to you as a lump sum.
This refund does not include interest. Some companies will only refund the premiums you paid for the term policy but NOT what you paid for the rider itself, while others will refund you for both your term policy and the rider. This can act like a built in savings account for you and can add up to a lot of money over a longer term period.
• Guaranteed Insurability Rider
This particular rider is ideal if you think you may require additional life insurance at a later date. The rider ensures that you can purchase additional life insurance coverage at “some future time” without having to provide you insurer any information about your insurability and without having to take a medical exam.
Generally most of these riders allow you do this at specified time intervals such as at particular ages or every few years defined in the rider. This can be very advantageous because life insurance becomes increasingly more expensive if your health declines, and where you could be declined altogether.
Keep in mind that the company will determine your renewed premium based upon your age, and life insurance does become increasingly more expensive as you age.
• Child Term Rider
No one wants to profit from the death of their child, but there are many expenses involved should a child die unexpectedly such as from an accident or a serious illness. This includes funeral expenses, and considerable emotional and financial hardship for a family which is grieving the loss of their child.
Generally, this type of policy is purchased in “units”, where each unit is equivalent to $1,000 in coverage. If you wanted to buy $15,000 of coverage, you would be buying 15 units.
Coverage for a child term rider usually must be purchased before a child reaches a specific age such as age 17, and generally expires at a specified age such as the age of majority like age 20 or 22 for example. Some companies will also allow you to convert your child rider into a permanent policy so that you can ensure your child has life insurance coverage as they grow older and have their own family to care for. This helps to ensure that your child is insurable, regardless of any health issues that arise.
• Accelerated Death Rider
This rider has become an industry standard and can be found included for free or for a very nominal additional premium. The rider allows you to claim a specified portion of your death benefits if you become terminally ill and are expected to have a very short life expectancy such as your death occurring within one year or some other specified period.
The portion of death benefits that can be claimed may be “capped” at a specific amount and is available before you actually die. This can help your family to pay for medical or other expenses, and means that you can use the money in any manner you need to do so.
• Accidental Death Benefit Rider
This rider will cover you specifically if you die accidentally. The benefit of this rider is that it will pay out an additional benefit on top of the death benefits payable to your beneficiary. Often, the amount can be double or an amount specified. The rider is sometime referred to as “double indemnity.”
However, some companies have an additional feature which will also pay you a lump sum should you lose your vision or a limb(s). If you’re engaged in a dangerous occupation or hobby, this might be advantageous, but keep in mind that insurers will assess you for a higher premium if you are specifically engaged in dangerous occupations or hobbies.
Where Can You Find Affordable Life Insurance Rider?
If you’re looking for either a regular life insurance policy such as a term policy or permanent policy and wish to enhance your coverage with additional coverage with a rider, then you need to speak to an independent agent such as you can find here at Abrams Insurance Solutions.
It does not matter whether you’re in excellent health or if you have a serious health condition because at Abrams Insurance Solutions our independent agents have access to over 70 life insurance companies so we know which ones are more lenient especially when it comes to health problems.
If you are looking to enhance your life insurance coverage with a life insurance rider, and have questions or need some advice, then call us today at 858-703-6178.